Recently, the call for external auditor reports on client internal control structures has come from many fronts (i.e., Public Oversight Board, GAO, FDIC, etc.). The parties calling for these auditor reports typically assert that these auditor reports will serve to reduce management fraud. Before accepting the efficacy of such auditor reports in reducing management fraud, this implied efficacy needs to be investigated in a rigorous fashion. Currently, no research exists on such auditor reports. This thesis begins to fill the current void by providing a rigorous investigation of the implications of mandating such auditor reports on the actions of external auditors and upper-level managers.This thesis employs a game theoretic method to investigate the efficacy of external auditor reports on client internal control structures in reducing management fraud. The major results of this thesis suggest that the mandating of these reports will: at best, not reduce the level of management fraud; and, at worst, could even increase the level of management fraud.Predictions based on this theoretical investigation should serve as a warning to those who may view these mandatory external auditor reports on client internal control structures as a solution to the vexing problem of management fraud.